The Detroit News: Nearly Half of Detroits Property Owners Pay Nothing in Taxes

Shuttered and repossessed homes line the streets of a middle class neighborhood on the East side of Detroit. (Getty Images)

An estimated 47 percent of Detroit’s property owners pay no taxes, according to recent report from The Detroit News.

“Nearly half of the owners of Detroit’s 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis,” the report notes, citing more than 200,000 pages of tax documents.

“Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library,” the report adds.

In fact, according to The News, delinquency in the shattered city is so bad that that 77 blocks had only one owner who paid taxes in 2012.

Yes, one person paid taxes in an area covering 77 blocks.

The Detroit News: Nearly Half of Detroits Property Owners Pay Nothing in Taxes

Detroit: UAW workers protesting against GM supplier Johnson Controls Inc. (Getty Images)

Many of the people interviewed by The News said that they don’t understand why they should pay into a system that has failed to provide them with basic public services.

“Why pay taxes?” asked Fred Phillips, who owes more than $2,600 on his home. “Why should I send them taxes when they aren’t supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came.”

Republican Gov. Rick Snyder sent a team earlier to review the city’s finances. Shocker: The team announced this week that Detroit’s problems are too big for it to fix alone.

“Any emergency manager appointed by Gov. Rick Snyder would have to grapple with a broken property tax system. The city’s share of uncollected taxes last year was $131 million — an amount equal to 12 percent of Detroit’s general fund budget,” The News notes.

Here’s what they found after conducting a four-month analysis of the city’s tax problem:

Detroit has the highest property taxes among big cities nationwide and relies on assessments that are seriously inflated. Many houses are assessed at more than 10 times their market price, according to new research from two Michigan professors.

Detroit relies on a shrinking sliver of businesses and neighborhoods to pay the bulk of the bills. The three casinos, General Motors Corp., DTE Energy, Chrysler Group LLC and Marathon Petroleum Corp. paid 19 percent of collected property taxes. Five city neighborhoods, most of them downtown and along the river, paid 15 percent of the city’s taxes and represent only 2 percent of the city’s total parcels. In all, only 41 percent of the city’s parcels produced tax revenues last year because of delinquencies and a large number of tax-exempt land.

Detroit’s delinquencies are so pervasive that some owners have been allowed to keep their property even if they don’t pay taxes. Wayne County treasury officials are so overwhelmed by foreclosures that they ignored about 40,000 delinquent Detroit properties that should have been seized last year and said they will look the other way on about 36,000 this year.

The News quotes Lou Schimmel, Pontiac’s emergency financial manager, as saying Detroit needs to sort out its tax issues immediately.

“It’s broken,” he said. “It has to be fixed. You need the revenue.”

“It’s just plain simple. Your revenues are falling so fast you can’t afford to provide basic services,” he adds.

Final Thought: “Nearly 75 percent of voters in Wayne County, which includes Detroit, voted for Obama on Nov. 6,” FOX 2 Detroit notes.

So much for that “government bacon.”

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Featured images Getty Images. Click here to read The News’ shocking report.